TLDR
- Butterfly Network stock jumped 22% Tuesday to close at $9.93.
- Needham started coverage with a Buy rating and $10 price target.
- The firm highlighted Butterfly’s chip-based ultrasound technology and Embedded business.
- Butterfly recently reported record quarterly revenue of $32.6 million.
- BFLY was holding near $10 in Wednesday premarket trading.
Butterfly Network (BFLY) stock jumped 22% Tuesday after Needham initiated coverage with a Buy rating and $10 price target. BFLY closed at $9.93, up from $8.14 in the previous session.
The rally carried into Wednesday’s premarket session, although at a much slower pace. BFLY was trading around $9.98, up about 0.5%, after briefly reaching $10.05.
Needham analyst David Saxon pointed to Butterfly’s cMUT semiconductor-based ultrasound technology as a key part of his positive view. The firm believes the technology could support medical products outside Butterfly’s traditional handheld ultrasound business.
Needham Sees Growth Beyond Core Ultrasound
Needham highlighted Butterfly Embedded, which allows outside companies to build products using Butterfly’s ultrasound-on-chip technology. Saxon sees this business as a way for Butterfly to enter new medical markets without developing every finished product itself.
The analyst also pointed to potential upside from Butterfly’s existing ultrasound platform. Needham said several upcoming products and applications could provide near-term catalysts for growth.
One area receiving investor attention is Butterfly’s partnership strategy. The company recently entered a multi-year licensing agreement with Merge Labs to use its ultrasound technology in the development of less-invasive brain-computer interfaces.
Butterfly also works with Midjourney Medical, which is developing a full-body ultrasound imaging system using Butterfly technology. Needham views these Embedded relationships as an important part of its investment case.
The $10 Needham target is now only slightly above Tuesday’s $9.93 closing price. FactSet data cited by MT Newswires showed an average analyst target of about $10.50.
Revenue Growth Supports the Bull Case
Butterfly’s recent financial performance also provides context for the rally. The company reported second-quarter revenue of $32.6 million, up 39% from $23.4 million a year earlier.
That figure is important because some reports incorrectly listed $15.72 million as total second-quarter revenue. The $15.72 million figure was product revenue alone, while software and other services contributed another $16.89 million.
Gross margin increased to 71.4% from 63.7% a year earlier, helped by higher-margin Embedded licensing revenue. Butterfly also narrowed its adjusted EBITDA loss to $1.4 million from $6.2 million.
Management raised its 2026 revenue forecast to $119 million to $123 million and expects an adjusted EBITDA loss of $19 million to $23 million. The company ended June with $124.7 million in cash and cash equivalents.
The main risks remain valuation, continued operating losses and whether newer Embedded products reach commercial scale. Needham also highlighted competition from larger medical-imaging companies and the possibility that Butterfly will need continued investment to develop future generations of its technology.
For now, Needham’s new Buy rating appears to have been the main driver of Tuesday’s 22% rally. The latest trading shows BFLY holding near $10 Wednesday morning after its strongest recent one-day move.
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